Fit for 55: EU auto industry’s initial reaction to Europe’s climate plans

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Given the crucial importance of the mammoth ‘Fit for 55’ EU climate package for the auto sector and the millions of people it employs, the European Automobile Manufacturers’ Association (ACEA) is eager to study the full details of the proposals just released by the European Commission.

Carmakers are committed to bringing emissions down to zero. All ACEA members support the target of climate neutrality by 2050 and invest billions of euros in innovative and sustainable technologies. However, banning a single technology is not a rational way forward at this stage – especially when Europe is still struggling to get the right enabling conditions in place for alternatively-powered vehicles.

Oliver Zipse, ACEA President and CEO of BMW: “Ambitious climate targets need a binding commitment from all parties involved. The European Commission today made very clear that the Green Deal can only be successful with mandatory targets for the ramp-up of charging and refuelling infrastructure in all member states.”

“This will be essential to charge the millions of electric vehicles that European automakers will be bringing to market in the coming years, and to deliver an unprecedented reduction of CO2 emissions in the transport sector,” said Mr Zipse.

The proposed CO2 reduction target for cars of 55% by 2030 (based on 2021 levels) will be very challenging, and certainly requires a corresponding binding target for member states to build up the required charging and refuelling infrastructure. Moreover, the new CO2 target will significantly speed up the structural transformation of the automotive value chain, requiring careful management to minimise the impact on our economy and jobs.

Zipse: “The current proposal for an even bigger cut in CO2 emissions by 2030 requires a massive further increase in market demand for electric vehicles in a short timeframe,” stated Zipse. “Without significantly increased efforts by all stakeholders – including member states and all involved sectors – the proposed target is simply not viable.”

All options – including highly efficient internal combustion engines, hybrids, battery electric and hydrogen vehicles – must play their role in the transition to climate neutrality, particularly as we work to reduce the carbon footprint of the whole vehicle fleet on the street, so not only of new vehicles. It is not the internal combustion engine that is detrimental to the environment, but fossil-based fuels. Without the availability of renewable fuels, a 100% reduction target in 2035 is effectively a ban of the internal combustion engine.

“Within the context of the proposed technology restrictions from 2035 onwards, we urge all EU institutions to focus on innovation rather than mandating, or effectively banning, a specific technology,” Zipse underlined.

ACEA is pleased to note that the package includes binding targets for the deployment of charging and refuelling infrastructure, addressing the requirements of all vehicle types – not only those of cars, but also vans and heavy-duty vehicles.

However, on a first view, ACEA is very concerned that the targets fall far short of what is required, with a worrying reference to just 3.5 million charging points by 2030. According to recent Commission calculations a further decrease of car CO2 emissions to -50% in 2030 would require some 6 million publicly-available charging points.

As the proposal has introduced a new metric for the targets, ACEA members need to take the time to see what this translates into concretely in terms of the number of charging and refuelling points that will be made available to drivers across the EU, as well as their power level (ensuring there are sufficient high-power chargers suitable for trucks).

The extension of the EU’s Emissions Trading System (ETS) to road transport fuels is also welcome as it will help to put a visible price on carbon, thus incentivising the use of low- and zero-carbon fuels. If the regulatory framework is set right, this could help to make zero-emission vehicles competitive and attractive for our customers.

Looking ahead to the upcoming negotiations with the European Parliament and the 27 member states, ACEA expects that it will prove to be difficult to ensure that all the different pieces of this ‘Fit for 55’ puzzle fit together and create a coherent supportive framework.

“Strong political coordination will therefore be essential to deliver the ultimate aim of tackling climate change in the most efficient way – while keeping mobility affordable for all Europeans and preserving jobs for auto workers,” said ACEA Director General, Eric-Mark Huitema. “Policy makers have a historic chance to get this right.”

Following the unveiling of Europe’s “Fit for 55” package, Stephen Prendiville, Head Of Sustainability, EY Ireland commented: “The “Fit for 55” proposal is a welcome development, representing a comprehensive roadmap of structures, incentives, parameters and critical investments to enable Europe to meet its 55% carbon reduction goals (based on 1990 levels) by 2030. The proposal in of itself is a critically important signal for businesses, investors and citizens, that we are now committed to a further period of rapid change in our decarbonisation journey. This commitment is essential to allowing businesses and entrepreneurs to plan and to invest aggressively in the decarbonisation ambitions of Member States.

“That said, in order for Ireland to be a destination for investor capital, funding and expertise in the EU Green Deal and the new decarbonised economy – we must pass clear and comprehensive legislation and regulation. Our forthcoming carbon budgets need to be put forward so that planning and investment can advance on a sure footing. We already know that current policy interventions in Ireland will only get us to about half of our 2030 targets so there is now a real opportunity for Government to set out its stall in a comprehensive and robust manner. We need policy enacted to signal to business and investors that big changes must be accommodated in everything from mobility to energy systems, to our built environment. We also need solid mechanisms in place in terms of incentives and subsidy structures, clarity of planning process requirements and more.”

Some of the key announced by the EU Commission include proposals for: 

  • Tighter emission limits for cars, which will effectively end new petrol and diesel vehicle sales by 2035
  • A tax on aviation fuel, and a 10-year tax holiday for low-carbon alternatives
  • A carbon border tariff, which would require manufacturers from outside the EU to pay more for importing materials like steel and concrete
  • Ambitious targets for expanding renewable energy
  • A requirement for Member States to renovate buildings that are not deemed energy efficient

Phil Kane, Country Manager (Ireland) at Eaton said:“If widely deployed, bi-directional EV charging infrastructure will reduce the total cost of ownership of electric vehicles and network reinforcement costs by smoothing peak loads on the electrical grid. Eaton therefore welcomes the EU’s draft Alternative Fuels Infrastructure Regulation (AFIR) which calls for all publicly accessible chargers to be capable of supporting vehicle to grid (V2G) applications. However, for the system benefits of bi-directional charging to be fully realized, V2G chargers must be deployed in all places where cars are parked for long periods – where people live, work and go out. This means related EU Directives such as the Energy Performance of Buildings Directive (EPBD) must mandate the deployment of the required infrastructure in new and existing buildings to support bi-directional charging. Finally, it is vital that car and building owners are fairly remunerated for the grid services they provide to network operators through the development of open and non-discriminatory flexibility markets across Europe. As EV adoption accelerates across Europe, the need for reforms to network codes that enable development of these markets will become more pressing.”